In early February, investigative non-profit Transparentem published a report detailing alleged worker exploitation in fashion supply chains across Taiwan, potentially implicating 40 major fashion companies through indirect suppliers. The main issue was evidence of migrant workers paying archaic recruitment fees to work in the country, trapping them in a cycle of debt with their employers, which made it harder to raise other abuses, including discipline via fines, poor living conditions and inadequate food. Transparentem raised an alarm bell for the ongoing presence of forced labour.
Taiwan is a crucial production hub for outdoors and athletic apparel fabrics. It is also a country that receives high volumes of migrant workers from other, very poor countries across Asia, making it a potential flashpoint for exploitation, says Transparentem’s director of strategic engagement Karen Stauss. Between 2022 and 2023, Transparentem interviewed 90 migrant workers from Vietnam, the Philippines, Indonesia and Thailand, who were each employed by textile suppliers in Taiwan. It found that these migrant workers were being charged recruitment fees as high as $6,000 by their employers, via recruitment brokers — among the highest in any apparel producing country it investigated.
“Many of the workers we spoke to migrated to Taiwan because they were promised very good jobs,” says Stauss. “Once they arrived, they found two issues: first, they sometimes had to pay really significant recruitment fees just to access those jobs; and second, they felt like they can’t complain about other labour abuses that are imposed, because they have to keep their job and earn enough to repay those fees.”
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By the time the report was published, the brands involved had already been made aware of the allegations over a year prior. Some denied their association with the accused suppliers, while others resolved to remediate, to varying degrees. But one brand — outdoors giant Patagonia, which is widely praised for its sustainability advocacy — stood out for its commitment to the cause. Not least because it had already found the issue and had been working to fix it for over a decade. In fact, for Patagonia, Transparentem’s report was not a surprise or even a reputational risk, but a long-awaited catalyst to drive industry-wide collaboration on the issue of forced labour.
“What made Patagonia stand out,” says Stauss, “was what they had already done before we arrived.”
Patagonia’s approach
In 2012, Patagonia rolled out its supply chain monitoring programme from Tier 1 (direct suppliers, such as finished garment manufacturers) to Tier 2 (indirect suppliers, such as spinners, weavers and printers). It quickly started to see red flags across several of its key sourcing markets.
“We saw issues like curfews, passport retention, forced saving schemes and recruitment fees, which didn’t sit well,” says Wendy Savage, Patagonia’s senior director of social impact and transparency. “That’s what started it all. We compared the results country to country, which is what led us to hone in on Taiwan. That’s where most of the red flags to do with migrant workers were present.”
Patagonia didn’t have a comprehensive set of migrant worker employment standards, so its social impact team spent over a year working with NGOs to develop one. It started with an in-person conference in Taipei. “We invited our suppliers and announced that we would eliminate fees for migrant workers,” says Patagonia social impact director Thuy Nguyen. “That was quite a shock to them, because the practice is commonplace in Taiwan and it’s entirely legal for workers to pay for their jobs. So we’re asking our suppliers to go above and beyond legal compliance. As a result, there was a long period of training and education, because it wasn’t clear to suppliers why they had to be responsible for those fees. It also took us engaging with the Taiwanese government and the Ministry of Labour, to give suppliers different options for hiring, including eliminating the labour brokers that were facilitating these fees.”
In 2015, Patagonia was struggling to get other brands on board. It decided to raise public awareness of the issue and reached out to The Atlantic to write a story about its efforts, giving the magazine access to its audit records and the problems it was dealing with. Soon, the emails from other brands began pouring in.
Still, it was only scratching the surface. “By 2017, we weren’t seeing the level of impact we wanted,” says Nguyen. “Fees had not been eliminated, although there were improvements in other areas that required less financial investment. So we took a more aggressive approach. CEO buy-in was critical to this, because we needed to hire additional staff around the world to support this work, and we needed more budget to pay for audits so the cost of an audit didn’t stop suppliers getting involved.”
That year, Patagonia launched its ‘No Fees by 2020’ roadmap, outlining the clear milestones suppliers would need to reach within three years. Rather than a top-down imposition, the roadmap was a collaborative effort with suppliers, says Nguyen, including training sessions, example policies and a toolkit for implementing them thoughtfully. Part of the process is for suppliers to interview every single worker entering their factory, to understand what their recruitment experience was like and to ensure they weren’t taken advantage of.
The strong supplier relationships it had built proved crucial in getting more significant brands on board with the roadmap. With this level of engagement, Patagonia was able to ask suppliers directly: which other brands do you supply? And who (or how many) would you need on board to make these changes? “There isn’t a magic number, but you quickly get a sense of who is important to suppliers,” says Nguyen. In this case, it was Nike, Adidas and Lululemon, who stepped up to support. “Patagonia makes up between 1 and 5 per cent of total production at any of our supplier sites in Taiwan,” she explains. “That wasn’t enough of an incentive for suppliers to eliminate these practices and take on extra costs, so we needed support from other brands. Once we had that, we saw vast improvements.”
Indeed, Transparentem did not find any evidence of workers being charged recruitment fees at suppliers affiliated with Patagonia after the brand imposed its ‘employer pays’ principle in 2020. The brand claims to have saved over 3,000 workers up to $1.7 million annually in recruitment fees since, verified through bank statements as well as worker interviews and surveys. This includes recruitment fees ranging from $1,000 to $7,000 as well as monthly service fees of $50 to $70 for the duration of each worker’s contract, and miscellaneous costs such as residency fees, health checks and passport renewal.
“As far as we could tell, Patagonia had pushed for suppliers to adopt those principles and they had been effective,” says Stauss. “Unfortunately, there were still other abuses happening at those factories, and the workers who had paid recruitment fees before Patagonia imposed employer pays principles had still not been repaid, which is a big problem. That’s one of the things we asked Patagonia to address, which they’re working on now.”
Patagonia says it continues to hold annual training sessions for its suppliers with an NGO called Verité, and it has hired an expert on the ground in Taiwan who works with its suppliers on these issues day-to-day. The brand also created a fees calculator, which Nguyen says helps suppliers to understand the cost of hiring migrant workers through various systems.
Pushing for a collective response
Brands overlooking these issues risk the wrath of policymakers and investors alike, says Stauss. “One of the heaviest burdens in fashion supply chains is on workers, and we have found that migrant workers are often among the worst-treated. Both the pending EU legislation and the US import ban on goods produced with forced labour mean that companies need to root out these issues quickly, and the chance of investors viewing them as material risks is rising.”
The suppliers investigated were operating in Tier 2, meaning they didn’t necessarily have direct relationships with the brands. To figure out which brands might be implicated, Transparentem used shipping data and cross-referenced supplier lists published by brands. Still, it could only see that the suppliers were selling something to an intermediary, which then sold something to the brands. It couldn’t uncover for certain whether the fabrics produced by the suppliers ended up in the brands’ finished garments.
“The first question we asked the brands was whether these suppliers were a materials source for them,” says Stauss. “If they said no, we asked them to explain why they thought that was the case. And even then, we asked them to take action, because this whole system needs to be brought down, throughout the whole sector. Not taking action also implies that you are willing to do business with an intermediary who does business with these suppliers — that in itself puts you at risk.”
The nature of fashion supply chains makes it difficult to say for certain whether these workers had a direct hand in each brand’s finished products. In an ideal world, Transparentem says brands would act to remediate regardless. Stauss points to German outerwear brand Ortovox as an example of a brand that took part in multiple working groups focused on this issue, despite finding no definitive connection between the suppliers accused of worker exploitation and its finished products. Another brand told Transparentem it had no connection to the suppliers, and declined to engage, only to find out months later that it was connected and needed to take action. Alongside Patagonia and Ortovox, the working groups set up by brands to incentivise suppliers include those of Adidas, Amer Sports, Cotopaxi, Lacoste, Lululemon, Nike, Patagonia, Pentland, Puma, REI, Sitka and YKK.
In September 2024, the Fair Labour Association (FLA) and the American Apparel and Footwear Association (AAFA) arranged for more than 50 brands to sign a joint letter addressed to the Taiwanese government, which they sent and followed up individually, hoping to make it harder to ignore. At the same time, Transparentem organised another letter, including more than 20 individuals alongside local and international civil society organisations. Similar letters were sent to key suppliers. “Some suppliers will have received this letter three or four times, which really drove the message home,” says Nguyen.
In December, 20 of the brand signatories headed to Taiwan to meet with external stakeholders, the Taiwan Textile Federation and government officials from the Ministry of Labour to push the issue further. But legal reforms are still a way off.
Patagonia might be a solid case study of how to address complex issues like this, but it wasn’t the only brand worthy of credit, says Stauss. According to Transparentem, Japanese zipper manufacturer YKK was “instrumental” in getting a major Taiwanese supplier to respond to worker concerns, and committed to support the repayment of recruitment fees, regardless of that supplier’s final position. Likewise, Adidas showed “early leadership” in bringing other brands together to coordinate a collective response, Puma was quick to respond, and Cotopaxi was “key” in addressing one of the slowest to act suppliers, despite early delays.
An ongoing challenge
The immediate response from brands is often to follow up with an independent audit, but the auditing system has significant flaws, and this can stall progress towards remediation, says Stauss. For this to be the knee-jerk response exposes a deeper challenge in fashion supply chains: that brands see it as risk mitigation rather than an opportunity for more equitable engagement.
“If you’re going to do an audit, don’t wait around. Make sure it’s high quality and not just used to push back on findings,” adds Stauss. “But we really prefer brands don’t do this step again, because it takes up time and resources that could be used to help suppliers make changes. Better still, go and visit the suppliers yourself and form a relationship so you can identify the problematic policies and put remedies in place.”
Since Transparentem’s report, all but one of the suppliers involved has completed an audit, and the process of repaying workers is underway. One supplier is still pushing back on the repayment structure, arguing for workers to pay the recruitment fees upfront and their employers to repay them monthly over three years. “In that case, the worker would still be held in that job. They’re still potentially trapped, which is not good practice,” Stauss continues. “Part of the agreement still to be decided is: to what extent are suppliers making the repayments, versus brands supporting them financially? That’s something we encourage brands to do, because consumer-facing brands often have a much higher profit margin than their suppliers.”
Getting brands to engage with direct and indirect suppliers is just step one. Moving forward, Stauss would like to see more worker engagement, too. “Part of the reason we found different violations is because there is very little worker organisation at these factories,” she explains. “Worker voice and worker power are two very different things. The worker’s voice comes in when you do a high-quality audit, but that’s not the same thing as empowering workers to demand dignified treatment and have the ability to secure it.” Looking ahead, Stauss says suppliers and brands should honour the worker’s right to freedom of association, include workers in the working groups whose policies affect them and make sure they feel comfortable raising grievances.
It has been 14 months since Transparentem first disclosed the information to brands. “Despite the great progress made in other areas, that’s 14 additional months during which workers are holding the financial burden of recruitment fees and going without repayment,” flags Stauss. “We wish repayment had happened quicker.”
As for Patagonia, the work continues. “There is no perfect supply chain, and there are issues in every single one,” says Savage. “This work is really ongoing and we would like to roll it out globally — it’s never one and done.”
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